Textbook Notes (378,540)
CA (167,150)
UTSC (19,212)
MGT (1,095)
MGTA01H3 (583)
Chapter 1

Chapter 1 Notes

3 Pages
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Department
Management (MGT)
Course Code
MGTA01H3
Professor
Chris Bovaird

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Wednesday, September 16, 2009
NN: Chapter 1 [MGTA03]
The Concept of Business and Profit
Business: Organization that produces or sells goods/services to make a profit
Profit: The money remained after revenue - expenses = profit
Expenses: The money spend on producing goods and/or running business
Revenues: The money earned when selling goods/services
Business profits increase personal incomes & business taxes support government
Economic Systems Around the World
Economic system: the way a nation allocates its resources among its citizens
Economic systems differ in ways of who controls and owns resources
Factors of Production
I. Labour: mental and physical training and talents of people
A. Employees who are well trained is an advantage to a business
II. Capital: funds needed to operate a business
A. Funds come from personal investment, shares, revenues
III. Entrepreneurs: one who organizes factors of production to earn a profit (risky)
IV. Natural Resources: Items used to make goods/services from natural states
V. Information Resources: Useful information used to help business achieve goals
Types of Economic Systems
I. Command/Planned Economy: Government owns and operates all industries
A. Communism: Government owns/controls all of the factors of production, makes almost
100% of the economic decisions (Ex: North Korea, very few examples)
B. Socialism: the government owns selected major industries (Ex: Cuba)
1. People choose their professions and small businesses are privately owned, but
government operation is inefficient
II. Market Economy: buyers and sellers participate in decisions
A. Capitalism: All factors of production owned by private individuals, the state plays no role
in making economic decisions (Ex: no know economy)
B. Mixed Market Economy: Private individuals own/control the majority of the factors of
production, makes most of the economic decisions (Ex: US, France, Germany, Japan)
1. Privatization: the conversion of government business to become public
(1) Increases productivity & becomes more profitable
(2) Example of Market Economy
2. Deregulation: reduction in the number of laws affecting business activity
(1) Simplifies the task of management
(2) Example of Market Economy (banks, airlines)
Interactions Between Business and Government
How Government Influences Business
I. Government as Consumer: is a major purchaser & many businesses depend on it
II. Government as Competitor: ?
1
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Description
Wednesday, September 16, 2009 NN: Chapter 1 [MGTA03] The Concept of Business and Profit Business: Organization that produces or sells goodsservices to make a profit Profit: The money remained after revenue - expenses = profit Expenses: The money spend on producing goods andor running business Revenues: The money earned when selling goodsservices Business profits increase personal incomes & business taxes support government Economic Systems Around the World Economic system: the way a nation allocates its resources among its citizens Economic systems differ in ways of who controls and owns resources Factors of Production I. Labour: mental and physical training and talents of people A. Employees who are well trained is an advantage to a business II. Capital: funds needed to operate a business A. Funds come from personal investment, shares, revenues III. Entrepreneurs: one who organizes factors of production to earn a profit (risky) IV. Natural Resources: Items used to make goodsservices from natural states V. Information Resources: Useful information used to help business achieve goals Types of Economic Systems I. CommandPlanned Economy: Government owns and operates all industries A. Communism: Government ownscontrols all of the factors of production, makes almost 100% of the economic decisions (Ex: Nor
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